Most economic theories of exchange rate movements agree that three factors have an impact on future exchange rate movements in a country's currency.
The factors are;-
(i) The country's interest rate
(ii) Market psychology
(iii) The country's price inflation
In the medium time period,exchange rate movements replicate things like modifications in interest rate differentials, worldwide competitiveness and the relative economic outlook in each financial system. On a each day foundation, change fee movements may mirror hypothesis or information and occasions that affect the respective economies.
An alternate price is the charge at which one foreign money can be exchanged for another between nations or economic zones. it is used to decide the value of diverse currencies in terms of each different and is crucial in determining exchange and capital waft dynamics.
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